Crown Resorts gaming licence should be revoked, probe recommends

A probe into Crown has dealt a crushing blow to its $2.2bn Barangaroo project after damning allegations of bad corporate behaviour.

A probe into Crown Resorts has recommended the embattled gaming giant have its Sydney casino licence revoked, in a crippling blow to its $2.2bn Barangaroo project.

In a report tabled to the state parliament, the NSW Independent Liquor and Gaming Authority (ILGA) said corporate “arrogance” was a driving factor in the company turning a blind eye to illegal money laundering within its Melbourne and Perth venues.

ILGA in its findings said the James Packer-backed casino was not a suitable licensee holder and its state gaming clearance should be revoked.

Media reports in 2019 alleged Crown facilitated money laundering activities at its Melbourne and Perth casinos through Asian high-roller junkets, sparking questions over whether it was fit to hold the licence.

ILGA has recommended Crown Sydney should not be granted a gaming licence. Picture: NCA NewsWire/Flavio Brancaleone

Crown’s serious corporate failures included the arrest of employees in China in 2016 “with numerous failures to escalate indicators of real risks to the staff”, the report said.

“Any applicant for a casino licence with the attributes of Crown’s stark realities of facilitating money laundering, exposing staff to the risk of detention in a foreign jurisdiction and pursuing commercial relationships with individuals with connections to triads and organised crime groups would not be confident of a positive outcome,” the report said.

Commissioner Patricia Bergin said in her findings there was “significant deficiency” in Crown’s corporate character and a lack of understanding and compliance of the country’s anti-money laundering and counter-terrorism financing laws (AML/CTF).

“Every single Crown director should have been versed in an understanding at the very least of: the methods by which money launderers can infiltrate and exploit the operations of the casino,” the report said.

Commissioner Patricia Bergin in her findings said there was ‘significant deficiency’ in Crown’s corporate character.

During hearings, evidence pointed to Crown trying to rectify the issue by implementing a slapdash one-hour training session on AML/CTF laws.

Ms Bergin said Crown’s character would never satisfy ILGA while it failed to implement proper measures to address the rise of money laundering within casinos.

ILGA also found numerous governance failings by senior management and the board, including Mr Packer, who ignored criminal risks when trying to get Casino giant Melco to buy part of his stake in Crown.

The report said “amazingly”, Mr Packer “did not turn his mind to the prospect” of the late Stanley Ho – who allegedly had underworld connections – having an interest in Hong Kong casino giant Melco, which planned to buy a 19.9 per cent interest in Crown.

The inquiry heard Mr Packer was insistent the Melco deal go through, but it only ended up buying 10 per cent, dumping its plans to buy the second tranche in February last year, then offloading its interest to US private equity giant Blackstone in April.

“The fact that Melco sold its shares and since April 2020 is no longer a shareholder and the fact that Mr Stanley Ho is now deceased, does not mean that it was unnecessary to explore these matters further.”

Ms Bergin’s findings also found numerous failing of governance by senior management and the board, including James Packer.

Mr Packer’s “forgetfulness or failing to turn one’s mind” to ensuring casinos remained free from criminal influence “must surely be intolerable”.

The inquiry also heard Mr Packer was given special treatment — getting privileged information through a controlling shareholder protocol agreement — despite quitting the board in 2018.

Mr Packer’s special treatment agreement was terminated during the inquiry, so it was now a “stock standard” relationship, Crown’s lead lawyer Neil Young said.

Counsel assisting the inquiry had argued Mr Packer should have no association with the Barangaroo venue at all due to prior poor behaviour.

Mr Packer making a “very serious threat against a business colleague” in 2015 “demonstrates a flaw in his character such as to adversely affect his integrity”, the report read.

His lieutenant Michael Johnston – an executive of his private investment vehicle Consolidated Press Holdings and a Crown director for the past 13 years — was found to have exacerbated the corporate governance failings at the group.

ILGA in its findings said the James Packer-backed casino was not a suitable licensee holder and its state gaming clearance should be revoked. Picture: NCA NewsWire/Joel Carrett

Ms Bergin’s report also took aim at chief executive Ken Barton for advocating to keep the Riverbank subsidiary account open without investigating possible connections to money laundering.

“The authority would be justified in concluding that it cannot have any confidence in dealing with Mr Barton as a director of the licensee or Crown,” the report said.

Chair Helen Coonan was exonerated of wrongdoing but the report said her understanding of the issues plaguing Crown was heavily reliant on Mr Barton’s advice and judgment.

It was also noted ILGA had no confidence in Crown director Andrew Demetriou, who during testimonies provided a “most unedifying” and “quite bizarre performance” by reading from notes on the witness stand.

The probe heard Australian Resorts chief executive Barry Felstead was warned in 2015 about staff being concerned for their safety and living in “constant fear of getting tapped on the shoulder” as they sought to lure Chinese high rollers to Crown’s Australian casinos.

Media reports in 2019 alleged Crown facilitated money laundering activities at its Melbourne and Perth casinos. Picture: NCA NewsWire/Penny Stephens

But that information never made it through to the board or risk management committee, and 16 of the employees ended up serving jail time.

Earlier on Tuesday, Crown began preparing for a potential investor backlash following the public release of the report, placing its shares into a trading halt.

The report said an enforceable undertaking could be committed, however ILGA would not be satisfied while Guy Jalland and Michael Johnston remain as company directors.

“If Crown is to survive this turmoil and convert itself into a company that can be regarded as a suitable person and achieve the same for the licensee, there is little doubt that it could achieve a fresh start and emerge a very much stronger and better organisation,” the report said.

Crown prepared for a potential investor backlash by placing its shares into a trading halt. Picture: NCA NewsWire/Penny Stephens

NSW Customer Service Minister Victor Dominello said he would consider the recommendations before formally responding.

“At the heart of the report is a relationship between organised crime, money laundering and gambling. And more importantly what steps we can do to protect the community against these sinister elements,” he said earlier in the day.

An opposition spokeswoman said the report was “damning” and Labor would request a hearing with Mr Dominello.

Independent MP and anti-gambling campaigner Andrew Wilkie said the findings had implications for Crown’s casinos in Melbourne and Perth.

“Surely it’s self-evident that Commissioner Bergin’s findings mean the company is unfit to continue to operate any casino in Australia,” Mr Wilkie said.

“To that end I call upon the premiers of Victoria and Western Australia to suspend Crown’s casino licences in their jurisdictions, and to immediately establish commissions of inquiry to get to the bottom of what is now a genuinely national issue.

“I also call on the Prime Minister to revisit my repeated calls in the federal parliament for a royal commission into the casino industry.”

Crown said in a statement lodged to the Australian Securities Exchange it reviewing ILGA’s report.

Originally published as Crown Resorts gaming licence should be revoked, probe recommends